Off the Shelf provides a platform for Retailers and Consumer Packaged Goods companies to discuss and gain insights on the pressing problems, trends and solutions.

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January 30, 2014

The changing behavior of retail customers

On behalf of Nitin Lehri

In today's knowledge based society, consumers are aware that products are interchangeable. What has led to this self-awareness? Of course internet revolution and social forums riding on the cyber wave have a major part to play in this. Organizations have gone to a great length to increase the penetration and reach every consumer in its household thereby educating consumers. Thus consumers have gradually migrated from 'hard' shopping to 'smart' shopping. Few years back retail landscape could be summarized as small corner shops or couple of mom-and-pop stores with few scattered supermarkets. Consumers were having few substitutes for a product at any given store. Further there were few options for the stores itself in the vicinity. Now even the supermarkets are getting saturated fighting for a piece of pie especially in developed economies like UK or Germany. Another significant change has been in purchasing power of consumers as they comfortably splash on luxury goods after satisfying their physiological needs. Thus the standard consumer target group "Joe Bloggs" of 1950s has metamorphosed into multiple precise target groups.

Joe Bloggs - the average consumer from 1950s who used to spend on regular stuff. Increase in income levels made it possible to venture into luxury segments i.e. travel, electronic goods, car etc. This group was not used to self-service until supermarkets mushroomed.

Yuppies - the Young Urban Professionals of 1980s whose obsession with class and quality gave birth to brands and popularized champagne. Communal living gave way to single households.

Dinks - hot on heels of Yuppies came Double-Income-No-Kids couples in 1990s for whom priority in life was career. Marketers made a queue for them considering their high purchasing power due to low costs.

Lohas - 20th century saw health conscious well-educated high income consumers who believed in Lifestyle Of Health And Sustainability. Producers started focusing on standards, governance, working conditions and environment friendly products for e.g. organic produce, nutritional information, best before dates.

Woopies - Economic superpowers like Japan and Germany are focusing now on Well-Off Older People due to their declining working population. Driven by generous pension schemes and their own private wealth, they are well-positioned financially.

All this makes life of the retailer challenging. The time has come to answer what 'motivates' consumers rather than just focusing on the needs. For e.g. products like washing detergents and toothpastes are trying to showcase what 'extra' can they offer besides their respective primary purpose. Consumers can no longer be treated as a standard target group where everyone will react in the same way. Retailers need to make use of behavioral economics and market research data to understand the behavioral trends of personalization, virtualization, mobility or interactivity and reform precise segments with pin-point communications. For refined understanding of the consumer, optimum contact or connect is to be practiced so the message and the channel has to be picked carefully. Sentiment marketing is another way forward for the retailers which take into account the behavioral patterns of consumers.

First step towards understanding the customer is business intelligence. Thus a significant strategic decision in this direction is to build up data and make use of the analysis. Organizations queuing up for Big Data cannot be without a reason. Strong corporate commitments towards data have fuelled the success of retail giants like Tesco, Walmart and same hold true for others irrespective of their size. The good news is that even customers are opening up to share 'intelligent' data which can be as simple as a like on the FB page. Another example is the non-transactional information where customers react to online recommendations presented to them based on the products they are looking for as in flipkart or bookadda. Data from multiple such feeds enriches the data mart which further empowers retailers to fine tune their contact strategy.
Coming to the channels to establish the 'connect' (CCCM and MCCM are the fads), orthodox channels like print media, billboards and snail mails were popular among Joe Bloggs but with Yuppies and telecommunications revolution, telemarketing boomed. Call center agents started explaining the offers in detail. Dinks were more tech savvy so retailers started using e-mails with them which was much more cost effective. With Lohas, retailers can showcase the credibility and certifications through web marketing. Organizations can tap social forums to get a pulse of this group. For Woopies, retailers should go for relationship managers or store managers. Even though this group contains high net-worth individuals, usually they are not tech savvy or used to details over phone. Store managers will add a personal touch and consumers will prefer to return to stores that understand what they want.

January 16, 2014

Yin-Yang of online and offline-from two different worlds to a state of harmony

On behalf of : ** Jaspreet Singh**

Not too long ago, we didn't have any identity on the Internet and there used to be only one world for us. Online space was restricted to governments and academic institutions- it was a separate life-less world with little connection to our daily lives. Gradually, with the mass adoption of email culture and the advent of socialization, collaboration and personalization in the online space, it seems to be brimming with life. Now each one of us are active online and our personal life, work life, education, etc. seem to be imbued with the online world.

Though we keep shuttling between these two worlds, Online and Offline worlds are often seen as separate. Is this just a perception or we really are living in two different worlds? We are. And this perception arises due to lack of physical or in-person interaction with the other side. The majority of online solutions being built are lacking physical or in-person interactions with the other side - the Disembodiment phenomena.

In my view, this equation of Online-Offline is equivalent to the Yin-Yang symbol of life. Online world which is full of energy, enthusiasm and a lot of activity represents Yang and our offline world is relatively passive with calming energies and represents Yin. People have started realizing the fact that their Yin (Offline world) is suppressed and their life demands balance.

In today's era, solutions which bridge the gap between online and offline worlds will be the winning solutions. Re-embodiment, a technique used to reduce the sense of disembodiment online, has been embraced successfully by Lenskart.com and Fits.me. Lenskart's 'try on your face' feature fulfills the customer's urge to physically see how the glasses or frames look on their face. Similarly, the 'fit' of the clothes is a major challenge as 70% of the returned online purchases are due to a poor fit. Fits.me provides 'virtual fitting' feature enabling user to visualize the look and feel of own self, reducing the gap and urge to really go to the store physically. 'Intellifit' a kind-of try-room placed in the Levi's stores scans customers to recommend best-fit.

Collaboration and co-creation are also making waves in e-Commerce solutions. For one of our clients retail e-Store, we allowed customers to design their shoe and also co-create by sharing the in process shoe-design screen with their social group in real time to take their opinion. This idea has been quite appreciated by the end-customers, as it enables the person to have his/her friends along while shopping. With this model, customers need not be alone while shopping online - they can choose to take real time opinions while shopping.

Localized shopping, entertainment and augmented shopping (e.g. SnapShop) are trying to provide the user with the real-world view in real-time. The success of Groupon and Yelp is a good example of this perspective. Bridging efforts are also happening from the other side of the spectrum as well. Physical stores are being equipped with more and more kiosks, QR code and Bar-code scanners enable users to leverage online information for similar products, product and price comparison- the bar-code and QR code scanning applications in the Smart-phones further add to the online experience while in the Physical store.

We can thus see that these two opposites (online and offline) are interdependent and inter-transformation of the both these worlds will continue to create new balances and ensure harmony. The solutions which will sew the online and offline worlds together can expect greater success in the e-Commerce and Online space.

January 14, 2014

Online shopping in small town India: Will it be a feasible model?

On behalf of : Manideepa Talukdar

India is the fastest growing e-commerce market in Asia according to a study conducted by Forrester Research in 2012 for ASSOCHAM's 2nd National Conference on e-Commerce 2012. In 2013 the Indian e-commerce market grew by a mind boggling 88% to $16billion as per a survey conducted by the industry body ASSOCHAM. In the early days Indian e-commerce market was being led by Tier I cities but the trend has moved on to smaller towns. For instance online shopping website Jabong.com derives 60% of its revenues from smaller towns.

Online retailers face several challenges while servicing small town customers:
a) The risky Cash on Delivery(CoD) is a preferred mode of
payment
b) High number of returned goods
c) Unreliable internet payment gateways
But the biggest problem faced by online retailers while servicing small towns is Logistics.

Let's look at a few options retailers have to overcome these challenges:
a) In-house delivery options
b) Online marketplace
c) Logistic solutions partners
d) Franchisee based model

Certain big retailers like Flipkart.com, Zovi.com are already using their in-house delivery model. But many times the in-house logistic divisions cater to only a few cities as large volumes are not seen in small towns. To drive volumes bigger retailers can offer delivery solutions to smaller players who can take advantage of a bigger player's network and expertise while the bigger player can optimize costs through volumes achieved.

The second option of online marketplace is where individuals and companies can list their offerings using one platform. They can then use the online marketplace's shipping and warehousing facilities. Amazon.in and Ebay.in offer such facilities to users. Even large online retail players in India like Flipkart.com and Snapdeal.com have started offering these facilities. Other well-known online market places in India are shopclues.com and craftsvilla.com.

The third option of logistics solution partners is a new business opportunity for traditional logistics solution providers. Logistics partners cannot just deliver purchased items to shoppers but also handle returns as well as handle cash for the COD option. DTDC has recently launched DotZot, a company which focuses on providing end-to-end logistics and warehousing services to e-commerce players. The other players in this space are Delhivery.com and Chhotu.in.

The fourth option is the franchisee based model. Big Bazaar has launched a new model for e-commerce called Big Bazaar direct in the Vidarbha district of Maharashtra, and will expand to the Northeast and Gujarat soon. In this model franchises personally visit customers and take product orders and place the same online through tablet computers.

Online shopping portal Edabba has set up Trust Points(TP) across the country which are managed by small shop owners who own computers. Shoppers who do not have access to the internet or would not want to carry out online transactions can visit these TPs to shop as well as collect their goods. This is an innovative solution which can drive down logistic costs in remote areas as all customers in a certain area can have their goods delivered in one place. In addition to this such a model can also provide home based employment to net-literate citizens who want set up outlets exclusively for franchisee related work. Such franchisee outlets can also provide a solution for 'feel factor' problem seen online retailing. Franchisee stores can allow customers to 'feel' the demo piece of the product and then order it online thus minimizing returns. Overall, it's a win-win situation for both the retailer as well the customer. The retailer will have to account for the service charges that it has to pay to the franchisees. But the service charges can be worked out to be lower than carrying costs of inventory to service small town customer across a vast country like India.

Online retail is expected to grow to $56 billion by 2023 according to ASSOCHAM. Small towns will continue to drive growths in a big way with more and more increased internet penetration. Online retailers who are able to provide innovative solutions to buyers from small towns will in the long run see a large growth in their market share.

January 12, 2014

How to engage your online customers' brains

On behalf of : Jayalakshmi Subramanian
Is social commerce even worth discussing? There is a lot of noise being made about social media and how it is the manna from heaven from marketers. While one can safely say that investing in social media might give some monetary returns and returns more in the form of intangibles such as brand building and consumer intimacy, the real question is - Is there any spending happening aided by social media or in other words is Social Commerce a reality now?

To answer this question, one only has to look at the Thanksgiving that just went by and the statistics provided by the retail federation. The retail federation reports that 92 million people shopped, (89 million last year), with the biggest gainers being the online retailers. According to the survey conducted by retailers, almost 50% went online on Black Friday. At the same time ShopperTrak reported that traffic at brick-and-mortar stores was down more than 11% on Black Friday.

So as we can see, online retail is catching up in a big way and undoubtedly social commerce has a hand in these online purchases.

What drives social commerce?

When people buy online, people might do so for a variety of reasons including necessity, convenience, friends recommendations or due to getting better deals online. Retailers too, who want to sell online have aligned themselves to one or more of these reasons while selling to customers.

However, does the strategy of being the cheapest online retailer or the retailer who stocks all the products in the category (ies), suffice? Maybe yes, in the short term; but in the long run, only the online retailers who have invested time and energy in understanding what motivates the customer to purchase and in making the online purchasing "sticky" will survive and continue to make money from social commerce.

How then can one make the online purchasing sticky? The website has to appeal to the consumer in a manner which makes it more meaningful to them. Websites which are typical e-commerce sites would take on a USP of convenience, value (eg. eBay), while social commerce sites will provide a social graph which includes recommendations from known people (eg. Chirpify, F-Commerce). While these kinds of websites are a dime a dozen now, the websites that will survive in the future are the ones that go beyond and offer something meaningful to the lives of its customers - this is now being referred to the evolution of social commerce into "Emotional Commerce".

How to make social commerce viable?

So why should one believe that social commerce which lends itself to people's lives be any better at generating revenue? In his book, "Social: Why Our Brains Are Wired to Connect", UCLA psychologist and neuroscientist Prof. Matthew Lieberman outlines how our brains are wired for reward and punishment and how this can be extended to the social world. He claims that social bonding stimulates the reward circuitry in the brain, while social isolation causes pain similar to physical pain. His ideas and insights from experiments, that people seek pleasure and avoid pain are applied in the social world too. He claims that pleasure is triggered in the "social brain" by connecting and sharing, by expressing empathy and by showing kindness and living harmoniously with each other.

So marketers need to ensure that their brands touch these chords in people's brains by allowing them to share, express empathy or do acts of kindness - have a socially led brand which allows its customers to do one or all of the above to derive pleasure.

And customers being the creatures they are, will continually seek to feel the pleasure again and again...and thus ensure revenue from social sites which offers these rewards. Proof of such emotional commerce being viable is demonstrated by the startup website Fab, now a two-year-old online store for design goods, which has seen margins comparable to Apple - 43% and revenue growth of 500% by 2012 and is today getting raising $150 million from investors to grow globally. The underlying philosophy for the Fab founder, Goldberg, has been the social brain - "People love sharing their latest design find and entire experience is all about design being a social experience".

January 7, 2014

Gaining Insights into Competition (through Social Media) like never before

On behalf of : Princee Jain

A couple of previous blogs (Can insights from social analytics be the final piece to the "360° customer view" puzzle?) explain how social media can help profile consumer behavior towards a brand, a product, an event etc. In this blog I would like to throw light on how social media can help companies know their competition far better than before especially from the days when there was no social media.

Most global brands in consumer products space have presence across important social platforms like Facebook, Twitter and YouTube. Unlike Point-of-Sale (PoS) data or e-commerce data which is inaccessible from a competitor's standpoint, social data is readily available from competitor's official Facebook accounts, official twitter handles and hashtags, and official YouTube channels. User engagement data as well as the data posted by the competitor company from all the major social platforms across geographies is measurable from a single place with the help of a set of social analytics tools like Radian6 by Salesforce.com, Sysomos by Marketwired, Lithium by Lithium, Collective Intellect by Oracle etc.

Most of these tools were developed by individual startup firms and later on these small firms got acquired by large technology companies, signaling the importance of social media measurement platforms. These tools vary in the variety and depth of features provided but most of them provide a Conversation Trend over time, a Conversation Cloud with important conversation keywords, Sentiment Analysis (classified as positive, negative or neutral), Demographic Data at an aggregate level, information about most Influential accounts and a general river of all posts. The various social media monitoring tools continue to evolve and become more relevant and efficient by including relatively new social media platforms (tumblr, Pinterest, google+...) and by improving their Natural Language Processing (NLP) algorithms for better semantic analysis.

The analysis of competitor's social data using these tools can reveal important insights about the competition and its consumers, which is worthy of attention by any global marketing department. Fore-mostly, a marketing department can gain insight into competitor's overall 'Social Marketing Strategy' for each of its products, brands, new releases, campaigns, events etc. One can gain insight into how the competition remains relevant and responds to its consumers in different geographies - the frequency of the official posts, the content of these posts, demographic customization if any, day and time of posting etc. Then, one can gain insight from the competitor's consumer response aspect as well - like the volume of responses that competitor's official postings generate, sentiment of the conversations, reasons and features of most popular products etc.

Monitoring competitor social campaigns can tell a lot about their campaign mechanics - the way these campaigns were activated (whether by promotional offers, giveaways, consumer involvement or celebrity endorsements) and how the interest in these campaigns was kept alive over a period of time and if a similar strategy was followed across campaigns. Particular campaigns and product launches when analyzed over a period of time reveal their peaks and troughs which can help a company benchmark the social trend of the launch of its own similar product line vis-à-vis its competition. With the help of text analytics, it is possible to deep dive further to unearth the most talked about brands, the context in which they were being discussed, the reasons for their popularity, features which derive brand affinity and the demography (age, gender or geography) of the most relevant consumers discussing competitor's brand.

Analyzing competition from social media perspective can help a company know where they stand in terms of relative popularity, relative sentiment about its products and brands, and how it's social strategy is different from its top competitors.

According to a Search Engine Journal report, "The growth of Social Media", 93% of marketers use social media for business. The same report mentions that 72% of the online visitors used social in mid-2013, up from 67% in 2012.Social Media Analysis has opened the possibility of knowing the competitors (especially of consumer product companies with brands) and its consumers like never before and this possibility is only going to be more insightful in the near future as more online users become social and more marketers adopt social media for business.

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